Snuffing out tobacco will be easier on the pocketbook for many Minnesotans in the new year.
On Jan. 1, the state of Minnesota started waiving copays in the Medicaid and MinnesotaCare programs for prescriptions of FDA-approved smoking cessation medications.
Meanwhile, the trend continues of employers providing premium discounts to nonsmokers and those trying to kick the habit.
The mix of health plan incentives takes aim at the big health care costs connected with smoking.
The move by Minnesota’s public health insurance programs comes several years after the federal Affordable Care Act (ACA) required employers with health plans to provide smoke cessation benefits without copays, said Bob Seng, a partner in the benefits and compensation group at Dorsey & Whitney LLP.
“The states are catching up,” Seng said. “Just about anyone in an employer health plan who can commit to trying to quit smoking is going to save money.”
About 14 percent of Minnesotans, or roughly 580,000 adults, smoked cigarettes in 2014, down from about 16 percent in 2010, according to surveys from the Minnesota Department of Health and a Bloomington-based nonprofit called ClearWay Minnesota.
A big driver of the decline was a large tax increase on cigarettes in 2013, said Anne Mason, a spokeswoman for ClearWay Minnesota, which tries to help people quit tobacco through its QuitPlan program.
The group hasn’t looked at whether changes in health insurance have contributed to the decline in use, Mason said, but it supports the change in Medicaid and MinnesotaCare. Participants in the programs are more likely to smoke, she said, and copays can be a barrier to getting help.
“It’s a very busy time of year for quitting,” Mason said.
For the past 10 years, the state’s Department of Human Services has covered smoke cessation medications and services in public health insurance programs, said Nathan Moracco, an assistant commissioner.
With the new policy, enrollees won’t be charged medication copays of $1 to $3 in Medicaid, and $3 per prescription in MinnesotaCare.
Medicaid provides health insurance to people at or below the poverty line, while MinnesotaCare covers a slightly higher-income group. In 2013, enrollees in the programs paid about $90,000 on copays for smoking cessation.
“This is an important step to try to get folks to reduce or eliminate their dependency on smoking,” Moracco said, adding that the change was passed by the Legislature in 2015. “There’s obviously a huge benefit there for the enrollee. … We would expect our costs to come down because the costs related to smoking are significant.”
The state health department estimates that smoking in Minnesota racks up around $2.5 billion annually in medical costs. More than $563 million of these costs are covered by state Medicaid, according to the Department of Human Services.
The ACA requires that preventive services, including tobacco cessation therapies, be available without copays to people newly covered under the health law by Medicaid.
But the law didn’t eliminate copays for groups that were eligible for Medicaid before the ACA, said Erika Seward of the American Lung Association. Minnesota is the first state to address that gap, Seward said.
Meanwhile, the American Lung Association is concerned about the premium surcharges that increasingly are being asked of smokers in large employer health plans.
“We know that the penalties are not effective in encouraging people to get the help they need to quit,” Seward said. “We know that 70 percent of smokers want to quit. And we know that it takes upward of seven to nine times to quit successfully.”
In its 2015 survey of employers with more than 500 people, Mercer found the median reduction in annual premiums was about $500 among companies that vary the employee contribution for health insurance based on tobacco-use status.
It’s a comparable figure in the Twin Cities, said Seng of Dorsey & Whitney, adding that smokers typically can avoid surcharges if they’re trying to quit.
In 2012, about 19 percent of larger firms surveyed by Mercer said they varied the employee contribution amount based on tobacco-use status, or provided other incentives to encourage employees not to use tobacco. By 2015, the share was up to 29 percent.
Whether the premium surcharges should be considered penalties or incentives is up for debate, Seng said. Opinions are mixed as to the effectiveness of the surcharges, he said, but some of their popularity a few years ago stemmed from CEOs who were particularly bullish on the idea.
The enthusiasm at the top of organizations has diminished to a degree, Seng said, but surcharges remain a prominent feature of many large employer health plans.
An emerging trend, he added, is that more companies are considering smoking cessation help for all employees — not just those in the employee health plan — in new forms such as apps and enhanced phone counseling and classes.
“I think that some interesting experimentation is going on at the employer level,” Seng said, “to find a new way to fix this problem.”